Future looks bright for the UK oil and gas decommissioning sector

According to Decommissioning Insight, a report based on a survey conducted by Oil & Gas UK, it is estimated that the offshore oil and gas decommissioning sector of the UK is going to increase to £16 billion over the next decade.

Oil & Gas UK’s operations director, Mr. Oonagh Werngren said “While they forecast an increase in expenditure compared with the £14.6bn recorded in 2014, the increase is primarily due to new projects entering the 10-year survey timeframe rather than increased cost estimates from existing projects.”

Over the next decade, 79 platforms are forecast for removal across the UK continental shelf (UKCS) representing around 17% of some 470 installations that will require decommissioning over the next 30 to 40 years.

The survey confirms there is a small number of major decommissioning projects under way with well plugging and abandonment activities representing the largest category of expenditure with over 1,200 wells scheduled for closure over the next decade. While the industry recognises decommissioning activities are steadily growing, its focus is to maintain offshore production in the North Sea for as long as it’s safe and economically viable.

The key findings of the report include:

• Actual expenditure on decommissioning on the UKCS in 2014 was just over £800m, with much of the forecast activity completed.

• Total forecast decommissioning expenditure from 2015 to 2024 is £16.9bn. This is an increase of £2.3bn on the 2014 report’s ten-year forecast of £14.6bn, primarily due to 47 new projects entering this year’s survey.

• The majority of new projects appear towards the end of the 2015 to 2024 timeframe, with nearly two-thirds of the associated expenditure occurring post 2020. Technological advances and improved production cost efficiency could defer the timing of decommissioning for these projects.

• 50% of the total forecast expenditure will be concentrated in the central North Sea (£8.4bn). Thirty-two of the new projects are in this region.

• Since the 2014 report, total forecast expenditure in the central North Sea and northern North Sea/west of Shetland regions has increased by £3bn to £14.1bn, and decreased by nearly £750m to £2.8bn in the southern North Sea and Irish Sea.

• The largest category of expenditure is well plugging and abandonment (P&A) at 46% of the total forecast expenditure.